UAE and Gulf Based Australian Expats Count The Cost Of Investment Traps

UAE and Gulf Based Australian Expats Count The Cost Of Investment Traps

UAE and Gulf Based Australian Expats Count The Cost Of Investment Traps


UAE and Gulf Based Australian Expats Count The Cost Of Investment Traps – Every year thousands of Australian’s head over to the Gulf area for job progression and career growth, whether that is Dubai, Abu Dhabi, Qatar, Saudi Arabia or Bahrain.

With the benefit of tax-free incomes, Gulf based Australian expats are able to grow their wealth more rapidly than other Australian Expats and many are heading over with no intention of returning to Australia any time soon.

Once these Australian expats get settled and adjust to their new tax-free incomes and lifestyles it is time to consider their options around where to invest their surplus income. Unfortunately, you are not spoilt for choice in the above-mentioned areas with many offshore financial advisers wearing the hats of commission based salesman.

It is common practice for Australian expats to be persuaded into signing up for these 5 to 25 year ‘savings plans’, whereby you’ll contribute an initial capital amount into an investment bond like product and you’ll pay regular contributions into it and the adviser(salesman) will place you in a range of different investments.

Unfortunately, what is not disclosed in these type of products is firstly the type of upfront and ongoing commissions the adviser/salesman will receive for locking your funds away for years, not to mention the incredibly high ongoing fees that these type of investments charge.

Furthermore, if you wish to break the savings plan or withdraw your funds, you’ll incur a substantial percentage based exit fee. This type of fee slowly winds down each year of the life of the plan but fees can be as high as 50% of the balance. On average people who sign up for these 25 year plans only stick with them for roughly 7.6 years, until they get fed up.

These type of investment products used to be sold in Australia (1980’s and 1990’s) however with a rapidly maturing Australian financial services sector it is very hard finding any respectable financial planner recommending these products to clients. The options out there now are far cheaper, provide more liquidity and don’t rely on legislation that can change at any time in order to be tax effective for an Australian expat.

Another consideration with these types of outdated investment products is the level of control you have on where your funds are actually being invested. While some firms have improved their offering, there are still a high percentage of firms putting you in investments known as ‘Auto-Callable Structured Notes’(ACSN).

An ACSN has a measure of capital protection which only kicks in if the investment loses 15% to 30% after five years. If the funds lose more than the designated amount then this is absorbed by the investor, who would feel such a dramatic loss. Also, it is common for the adviser/salesman to put you into high-risk emerging market products as the commissions are usually higher.

While it is quite common that these investments options are sold to Gulf based Australian expats, there is also the option of investing your hard-earned funds back in Australia. To learn more this option, we have put together an unbiased Australian Expat Investing Guide that explains the pros and cons of all options. To download this guide please click here.

If you are considering building your wealth while you are away, please seek advice by a licensed financial planner so you don’t fall into the many traps based overseas.


James is an experienced financial planner who brings a multitude of skills and experience to the table when it comes to providing Australian expat financial advice. After completing university, James was an accountant for four years at which point he then moved into the financial services sector and became a financial planner. Combining his accounting skills with financial advice, James has advised individuals, families, and Self Managed Super Fund clients in the areas of retirement planning, debt reduction, cash flow management and portfolio management. James holds a Bachelor of Commerce with an accounting major, Bachelor of Business with a marketing major, Advanced Diploma of Financial Planning and is currently completing his Masters of Financial Planning.


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